Verizon is strengthening its position as the US telecom top dog after announcing it is buying AOL for a reported $4.4 billion (£2.8 billion).
The mobile vendor will gobble up AOL for $50 (£31) a share in a move that will help grow its online video offering and advertising. The deal, which is rumoured to be all-cash, will give Verizon access to the technology AOL has developed to provide high-quality web video as well as the scope to build on its online advertising platform, which raked in $2.5 billion (£1.5 billion) in revenue last year.
AOL Chairman Tim Armstrong told CNBC that despite the company turning things around in recent years it decided to make the deal with Verizon as being part of a major player helps them stay at the forefront of the very competitive video streaming market. They will also continue to work on its Internet of Things services.
The acquisition will create the largest mobile and video business in the United States which could also compete with Google and Facebook’s digital advertising power.
Verizon has previously floated its intentions to make waves in online video on mobile. Verizon’s Chief Financial Officer, Fran Shammo, was quoted as saying the service would be a mixture of free, paid-for and ad-supported content that focussed on shorter-length content.
The deal is set to be completed by the summer where AOL will become a wholly owned subsidiary.
It will undoubtedly see Verizon muscle up as a flag-flyer for connected TV and mobile video. Exciting times ahead, Americans.
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